The Perils of Being a Petrostate
The Wall Street Journal says that Russia’s experience with the oil price collapse is reminiscent of its experience in the days of the Soviet Union when it had very limited intercourse with the trading nations of the world. It still has a very high dependence on rents from its natural resources – 18.2 percent, third behind Saudi Arabia and Venezuela. The result has been a steep loss of value in the ruble – more than 50 percent – and a deep recession – 3.4 percent forecast by the IMF, 5.7 percent by the bank of Russia. Other petrostates – Nigeria, Norway, Mexico and Australia – are having the same experience. The U.S., because of its diversified economy, is not suffering as much from the oil price drop.